The big news this Super Tuesday is out on Mars, of all places. According to NASA scientists, parts of the red planet were once absolutely drenched with water -- enough high-quality H2O, by all accounts, to support life in a "good, habitable environment."
Here on earth, it's crunch time for Democrats in California, New York, Ohio, Georgia, Minnesota, Connecticut, Maryland, Massachusetts, Rhode Island, and Vermont. We don't take sides here at the Fool, but we are all about rockin' the vote. As for life on Mars? Right, like anyone who's ever been to Fool HQ had a doubt.
In today's Motley Fool Take:
- California Snubbing Wal-Mart
- Shameless Plug: IRA Center
- Marvel's Mystifying Split
- Quote of Note
- BJ's Stands Strong
- Discussion Board of the Day: Christian Fools
- More on Fool.com Today
lifornia Snubbing Wal-Mart
By Alyce Lomax
Among the concerns cited in the article include Wal-Mart's tendency to open smaller stores, then shutter those to build Supercenters close by, leaving empty shells in communities. The retailer is also facing increasingly bitter public attention for its tendency to wipe out smaller retailers, including mom-and-pop shops.
On the other side of the coin, though, is the idea that low-income consumers need venues like Wal-Mart in order to keep house on a shoestring. Not only does Wal-Mart offer jobs and low-priced merchandise, its Supercenters tend to drive down prices of groceries in the markets they enter.
If California remains largely closed to the retailer, it's a lucrative market to miss. Beyond that state, USA Today points to the increasing number of communities across the country that are balking at the idea of Wal-Mart Supercenters plunking down in their backyards. Frustration with suburban sprawl, traffic problems, and overzealous development are all well-known issues, so it's hardly surprising that a Wal-Mart backlash would eventually become more serious as it seemingly moves into every neighborhood.
Retailers like rival Target
California's backlash is a trend investors need to watch when contemplating Wal-Mart's future, as the Supercenter concept has served it well. Dialogue about the company is becoming more political, with an increasingly negative eye toward some of its business practices -- even with the strange contradiction that it was deemed one of this year's most admired corporations in America. However, even if a kinder, gentler Wal-Mart emerges from all the recent public scrutiny, the company's also well established as a survivor and an innovator. This gives Wal-Mart one more way to prove its mettle.
Alyce Lomax does not own shares of any companies mentioned.
Sh ameless Plug: IRA Center
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Marvel's Mystifying Split
By Seth Jayson
The tragedy is that there was nothing really wrong with the fourth-quarter and full-year numbers reported today. Sales were strong for the year, up 16% to $347.6 million. Operating income more than doubled to $167.2 million. Operating margins zoomed from 27% to 48%, which yielded earnings per share of $1.58 (if you back out the one-time credit of $0.43 per share Marvel realized in the third quarter). There were a couple of missteps for the fourth quarter, but earnings still hit $0.18 per share, a penny better than expected.
For the year, cash from operating activities was $171 million, up 128%. And the generation of green will only accelerate when the firm retires its remaining debt in June and reaps the rewards of this summer's release of Spider-Man 2, along with many new games and other licensing. Marvel expects 2004 revenues to increase around 25% to near $430 million. Despite these strengths, it was forced to guide next year's earnings to around $1.30 per share, a drop from 2003 due to the fact that after success comes the taxman.
That's what makes the split look so curious. Remarks by President and CEO Alan Lipson contained the usual verbiage about improving liquidity, along with this tidbit: "The decision to split the stock reflects our interest in creating a more affordable share price, which will enable a broader base of investors and Marvel fans to purchase Marvel stock."
A little more of that and I'll have everything I need to fertilize my garden this spring. Under the plan, shares will be repriced from around $33 to $22. Do they really think that America's comic-book fans can't afford the extra $11 a stub? This looks like a facile and unnecessary attempt to hype the stock. Here's some unsolicited advice for Marvel's management: Sell the superheroes. Make loads of money. Let the shares sell themselves.
Fool contributor Seth Jayson makes regular visits to a nearby nuclear power plant, but has not yet acquired any superpowers. He owns shares of Marvel.
Qu ote of Note
"It is better to be feared than loved, if you cannot be both." -- Niccolo Machiavelli
BJ's Stands Strong
By Dave Marino-Nachison
Shares of wholesale club operator BJ's Wholesale Club
BJ's, which currently operates 150 warehouse clubs and 78 gas stations in the eastern U.S., has a smaller presence (in terms of store count) than do key peers Costco
The top-line figures bear this out best. Full-year net sales rose 15% to $6.58 billion, helped by same-store sales growth of nearly 8%. Revenue from membership fees also improved -- but by a slower rate, perhaps suggesting that existing shoppers were more loyal in fiscal 2004.
Moving down the income statement, however, things aren't as pretty. Cost of goods sold as a proportion of net sales (which excludes membership fees) fell year over year, but improved gross margins couldn't power higher net profit. SG&A expense increased and operating income fell. In the end, net income fell some 20% -- slightly more if accounting changes made during 2003 are taken into account -- to $104 million. That figure looks better if post-tax gains connected with certain lease liabilities are removed from both fiscal years.
There is more good news, however. Cash from operations came in well ahead of reported net income, and BJ's did generate more free cash flow than it did last year even as net income fell and capital expenditures rose. Same-store sales were up nearly 8% in February, and management is projecting a return to net income growth this year.
All this has helped BJ's shares outpace the S&P 500 -- not to mention Wal-Mart and Costco -- over the last 12 months, indicating that investors are standing behind the company's efforts to compete with the "big boys."
Fool contributor Dave Marino-Nachison doesn't own any companies in this article. He can be reached via email.
Di scussion Board of the Day: Christian Fools
Did you see The Passion of The Christ this past week? What did you think? Was the controversy warranted? All this and more -- in the Christian Fools discussion board. Only on Fool.com.Mo
re on Fool.com Today
People are ga-ga over all things small. Check out part two of a Motley Fool special report on nanotech, where Carl Wherrett and John Yelovich survey the companies that could be poised to cash in.... Are you a market watcher? Good news! David Forrest believes that understanding the "wealth effect" and keeping a good eye on the market will help you to better manage your investments.
In other news:
- Hollywood's Failure Formula
- Genzyme's Oncology Acquisitions
- The Shine at Schein
- PETsMART Unleashed
- IM Convergence Heats Up
For a list of all our stories from today, see our Today's Headlines page.